AMP Inc. announces third quarter results.sales of $1.30 billion were up 17% from $1.11 billion in the year-earlier period, but down slightly from the record $1.34 billion in the second quarter because of the usual seasonal softness and the changes in the value of the U.S. dollar which reduced third quarter sales $25 million from the second quarter and increased sales $34 million from the year-earlier period. Third quarter earnings of 51 cents/share (up 16% year-to-year from 44 cents) are in line with analyst consensus estimates. Second quarter earnings were 61 cents before, and 45 cents after, one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. merger charges and 4% more outstanding shares. Compared to the second quarter, third quarter earnings were negatively impacted by the seasonal dip in sales, currency effects, a charge for consolidating our U.S. military/aerospace connector operations, inclusion of the full loss of our AMP-Akzo printed circuit board business because we are acquiring sole ownership of AMP-Akzo by buying the 50% interest of Akzo Nobel Akzo Nobel is a multinational company, active in the fields of healthcare products, coatings and chemicals. Headquartered in Amsterdam, the Netherlands, the company has activities in more than 80 countries, and employs approximately 62,000 people. NV, and a higher effective tax rate (36% vs. 34%). The tax rate was reduced from 38% to 34% in the second quarter to achieve a 36% rate for the entire year. Margins before special charges and inclusion of AMP-Akzo's full loss are holding steady. Third quarter sales in the U.S. were up 16%, and international sales were up 13% in local currencies and 19% in U.S. dollars compared to third quarter 1994. Nine months worldwide sales were up 24%, with U.S. sales (43% of the total) up 15%. Strongest sales growth in the U.S. has been in the automotive, communications, and industrial/commercial electronics markets. International sales were up 20% in local currencies and 31% in U.S. dollars. The change in the average level of the U.S. dollar increased 1995 nine months sales $183 million compared to the year-earlier period. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales were up 24% in local currencies and 37% in U.S. dollars in the first nine months. Sales were strongest in the automotive, communications, and industrial/commercial equipment markets. Strongest country growth was in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. , Holland, and Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. . Although European car production has leveled off, we are achieving good growth in this market because of market share gains and rising electronic and connector content in vehicles. Asia/Pacific nine months sales were up 15% in local currencies and 27% in U.S. dollars. Because of the slow economic recovery and car production decline, our sales in Japan (over half of the regional total) were up only 7% in local currencies, while up 23% in U.S. dollars. Strong, broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased sales growth continued in the rest of the region because of robust economic growth and further migration of manufacturing activities to this region. Strongest markets were commercial/industrial equipment, computers, and networking equipment and systems. Sales in the Americas A·mer·i·cas , the See America. outside the U.S. were up 16%. EXPANSION Capital expenditures were $516 million for the first nine months and are expected to reach $700 million this year -- up significantly from $473 million last year and $370 million in 1993. About two-thirds of this spending is for machinery and equipment for capacity additions, productivity improvements, and tooling for new products. Most of the balance is for the approximately one million more square feet of floor space. In the Harrisburg Harrisburg, city (1990 pop. 52,376), state capital and seat of Dauphin co., SE Pa., on the Susquehanna River; settled c.1710 by John Harris, who established a trading post and operated a ferry there; inc. 1791. area we recently occupied a new 200,000 sq. ft. engineering facility and will soon complete a significant expansion of the corporate human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. development center. In Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , 1995 expansion includes projects in the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. ,
Great Britain, Hungary Hungary, Hung. Magyarország, officially Republic of Hungary, republic (2005 est. pop. 10,007,000), 35,919 sq mi (93,030 sq km), central Europe. , Scotland, and Switzerland. Asia/Pacific
expansion activity includes Malaysia and China.Employment rose 4,000 primarily because of first-time inclusion of AMP-Akzo, formerly a 50/50 joint venture, and a contract manufacturing operation, as wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. . OUTLOOK The outlook for continued growth is good. Sales should set a new high in the fourth quarter. If currency rates remain at present levels, fourth quarter sales would be increased about $20 million. With higher sales, earnings should be several cents better in the fourth quarter than the third quarter, and continue to rise next year. For this year it looks like earnings will be about $2.15-2.20/share before the reduction of about 18-19 cents/share from merger effects -- up about 22-25% from $1.76 in 1994 before restating for inclusion of M/A-COM. Our planning scenario assumes moderate economic growth throughout most of the industrialized in·dus·tri·al·ize v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es v.tr. 1. To develop industry in (a country or society, for example). 2. world, with no recessions likely in the next year or two, gradual recovery of the Japanese economy, and continued strong economic growth in the rest of Asia Pacific. Looking at the markets we serve, we believe we are in a transition from exceptionally rapid growth for much of this year in certain markets such as semiconductors and computers, to a good, but more moderate and sustainable growth rate Sustainable growth rate Maximum rate of growth a firm can sustain without increasing financial leverage. next year and beyond. Growth prospects for our core business of electrical/electronic connection devices (over 80% of sales) are good because of our extremely diversified diversified (di·verˑ·s worldwide participation in all electrical and electronic markets (growing 2 to 3 times faster than GDP GDP (guanosine diphosphate): see guanine. ), a steady stream of new products, timely entry into emerging geographic markets, and business environment trends which favor globally deployed suppliers who can meet steadily higher quality, delivery and service requirements. The $25 billion connector industry is projected to grow at a 6-9% annual growth rate the rest of this decade and we expect to exceed this rate by continuing to gradually gain market share in each region. Our overall sales growth rate during the rest of this decade should be better than the core business rate because of the increasing contribution from the faster growing M/A-COM wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. components business (about 8% of current sales) and our Global Interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. Systems Business Group (about 9% of current sales). This group includes most of our diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. into related components, cables, cable and panel assemblies, electro-optics, networking/premises wiring units, and ATM communications products and systems. With small shares in a variety of fast growing markets totaling some $80 billion or more, this group has good prospects of growing significantly faster than our core business for the next few years. In addition, continued use of acquisitions and strategic alliances as an integral part of our strategy certainly enhances our growth prospects. They leverage our basic capabilities and speed entry into new product and market sectors. Earnings could grow better than sales for the next few years because of the positive effects of good sales growth, productivity improvements, M/A-COM's rising margins, attainment of profitability in our Global Interconnect Systems Business Group, AMP-Akzo and military/aerospace operations, and perhaps a slightly better product pricing environment if industry capacity utilization rates Capacity utilization rate The percentage of the economy's total plant and equipment that is currently in production. Usually, a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. rise. ORGANIZATIONAL CHANGES William S William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack . Urkiel, age 49, joined AMP last month and has been elected Corporate Controller. He has a BA degree from Marist College Marist College is a private liberal arts college of 180 acres (72 ha), located on the east bank of the Hudson River near Poughkeepsie, New York, on US 9. The site was established in 1905, and chartered in 1946. and an MBA MBA abbr. Master of Business Administration Noun 1. MBA - a master's degree in business Master in Business, Master in Business Administration from Iona University. Urkiel held various financial positions at IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) during the last 27 years -- most recently as Vice President-Finance of IBM Japan. J. Peter Ballantyne, age 49, was appointed divisional Vice President-Optical Interconnect Systems Group. He received bachelor and masters degrees in engineering from Carleton University Carleton University, at Ottawa, Ont., Canada; nonsectarian; coeducational; founded 1942 as Carleton College. It achieved university status in 1957. It has faculties of arts, social sciences, science, engineering, and graduate studies, as well as the Centre for (Ottawa), and Ph. D. in engineering from Cambridge. He held various engineering and manufacturing management positions at AT&T during the last 23 years -- most recently as Vice President-New Business Development in AT&T's Multimedia Products and Services Group. M/A-COM PROGRESS REPORT M/A-COM was merged into AMP on June 30, 1995 through issuance of 7.6 million shares of AMP stock. The leading supplier of components for the wireless communications industry, M/A-COM's sales have increased each quarter this year and margins improved in the third quarter -- and prospects are quite good for these trends to continue. The smooth integration with AMP, the rapid conversion from military to commercial business, and the steady improvement in performance is beyond our original expectations. To keep ahead of rising demand, M/A-COM recently added significantly more production capability -- a 40,000 sq. ft. gallium arsenide An alloy of gallium and arsenic compound (GaAs) that is used as the base material for chips. Several times faster than silicon, it is used in high frequency applications such as cellphones, DVD players and fiber optics. facility from Cray Computer The Colorado Springs-based supercomputer company founded in 1989 by Seymour Cray after he left Cray Research. Cray developed the Cray-3, an incredibly fast gallium arsenide-based computer that ran at a 1 GHz clock rate. in Colorado. DIVIDEND ACTION Today the Board of Directors declared a regular quarterly dividend of 23 cents/share payable Dec. 1, 1995 to shareholders of record Nov. 6, 1995. The total 1995 dividend of 92 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. is up from 84 cents in 1994, 80 cents in 1993, and 76 cents in 1992 -- the 42nd consecutive annual increase. Harrisburg, Pennsylvania-based AMP Inc. is the world's leading producer of electrical/electronic connection devices. It has 40,100 employees in 200 facilities in the U.S. and 38 other countries. AMP stock is listed on the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Pacific and other regional stock exchanges (Symbol -- "AMP"). -0-
AMP INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
(Unaudited)
3 Months Ended September 30, 1995 1994(2)
Net Sales $1,297,413 $1,105,175 Cost of Sales 884,128 726,792 Gross income 413,285 378,383 Selling, General and Administrative Expenses 232,984 214,531 Income from operations 180,301 163,852 Interest Expense (9,059) (7,238) Other Income (Deductions), net 1,700 (5,930) Income before income taxes 172,942 150,684 Income Taxes 62,220 55,540 Net Income $ 110,722 $ 95,144
(1)Per Share - Net income 51 cents 44 cents
Cash dividends 23 cents 21 cents
(1)Weighted average
number of shares 217,796,691 216,923,674
(1) Per share data and weighted average shares have been retroactively restated to reflect the 2-for-1 stock split on March 2, 1995 (2) 1994 has been restated to reflect merger with M/A-COM 9 Months Ended September 30, 1995 1994(2) Net Sales $3,929,241 $3,178,254 Cost of Sales 2,646,703 2,096,628 Gross income 1,282,538 1,081,626 Selling, General and Administrative Expenses 747,794 604,118 Income from operations 534,744 477,508 Interest Expense (28,456) (21,060) Other Income (Deductions), net (16,363) (19,906) Income before income taxes 489,925 436,542 Income Taxes 176,370 164,382 Net Income $ 313,555 $ 272,160
(1)Per Share - Net income $1.44 $1.25
Cash dividends 69 cents 63 cents
(1)Weighted average
number of shares 217,628,152 216,984,195
(1) Per share data and weighted average shares have been retroactively restated to reflect the 2-for-1 stock split on March 2, 1995 (2) 1994 has been restated to reflect merger with M/A-COM
AMP INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONDENSED)
(dollars in thousands)
Sept 30 Dec 31
1995 1994(1)
(Unaudited)
ASSETS:
Current Assets:
Cash & cash equivalents $ 192,936 $ 244,568
Securities available for sale 62,737 156,708
Receivables 1,046,373 908,390
Inventories--
Finished goods & work in process 397,401 373,094
Purchased & manufactured parts 263,047 199,493
Raw materials 76,111 69,366
Total inventories 736,559 641,953
Other current assets 248,571 222,681
Total current assets 2,287,176 2,174,300
Property, Plant & Equipment 4,188,728 3,713,660 Less-Accumulated depreciation 2,350,144 2,138,978 Property, plant & equipment, net 1,838,584 1,574,682 Investments and Other Assets 329,280 343,564 TOTAL ASSETS $4,455,040 $4,092,546 LIABILITIES AND SHAREHOLDERS' EQUITY: Current Liabilities: Short-term debt $ 267,139 $ 182,338 Payables, trade & other 434,195 403,947 Accrued liabilities 576,511 520,637
Total current liabilities 1,277,845 1,106,922
Long-Term Debt 223,719 278,843 Other Liabilities & Deferred Credits 236,633 211,026
Total liabilities 1,738,197 1,596,791
Shareholders' Equity 2,716,843 2,495,755 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,455,040 $4,092,546 (1) 1994 has been restated to reflect merger with M/A-COM. CONTACT: AMP Inc., Harrisburg William Oakland, 717/780-6371 |
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